Securities Crowdfunding: More than Family, Friends, and Fools?

The US securities crowdfunding market opened on May 16th, 2016. I provide the first description of the companies and investors participating in this market using data on the full universe of Regulation Crowdfunding issues. I then demonstrate that investment in an issue is closely tied to economic fundamentals after the first week. This result is consistent with unsophisticated investors arriving in the first week and investing indiscriminately and relatively more sophisticated investors arriving thereafter. Based on this evidence, I conclude that the market provides a promising new way for high quality early stage companies to seek financing.